Monthly Wage Reporting: Here to Stay

Ask anyone who processes payroll… if there’s one task they don’t need, it’s filing another report. Make it a time-sensitive, penalty-threatened report, and the topic becomes grim quickly.

Here’s an example hitting some of our clients: In June of 2012, Illinois governor, Pat Quinn, signed the Save Medicaid Access and Resources Together Act, more commonly known as the SMART Act. The Act included a mandate for Illinois employers to file a report with their employee wages on a monthly basis. It went into effect in January of 2013 for employers with 250 or more employees, and that threshold has been systematically reduced to employers with 25 or more employees over the last year and a half. Critics say (quite rightly, in our opinion) that the required monthly wage reporting has presented employers with yet another burden of risk and increased administration costs.

The monthly wage reporting has been a hot button issue since it was enacted. Prior to the Illinois monthly reporting mandate, most payroll departments were only equipped with software to report wages on a quarterly basis. Employers and payroll service providers were given a short six months to develop software that would fit the specifications to meet the electronic filing requirement. Meanwhile, the Illinois Department of Employment Security has been quick to assess penalties for companies that have not been in compliance. The penalty for filing late ranges from $5 to $10 per $10,000 in wages filed.
Unfortunately, monthly wage reporting does not appear to be going away. In fact, it may be slowly catching on with other state employment agencies. In May of 2014, New Jersey introduced a bill that, if passed, would require employers with 50 or more employees to report employee wages to the agency within 20 days after the end of each month. This mandate would include “every form of remuneration.” The American Payroll Association notes that this would be an even bigger burden than the Illinois mandate because both the due date is ten days earlier and the types of payments/benefits that would qualify as remuneration in New Jersey can be difficult for a payroll department to calculate on a monthly basis.

The costs associated with developing and administrating these monthly wage reports along with the potential penalties have made this mandate a gloomy topic in the payroll world. Small businesses that process payroll in house feel the increased costs and frustration with these ever-changing mandates most acutely. No good news here… sorry to say that the reporting mandates don’t appear to be going anywhere.

Chicago unilaterally raises the minimum wage

The Chicago city council approved raising the city’s minimum wage to $13 by mid 2019 starting in next July when the rate will raise to $10 from the current $8.25. The next raise will be to $10.50 in July of 2016, $11 in July of 2017, $12 in July of 2018 and $13 in July of 2019. Subsequently the minimum wage will increase based on the local consumer price index.

There has been a lot of chatter at the state level about increasing the minimum wage state wide but nothing materialized thus far.

There are several ways in eStratEx to increase the employee’s pay rate to match the minimum wage as laws change. It is a little trickier to handle tipped employees whose tipped wages for a day put them below the minimum wage. eStratEx automatically looks up the Federal minimum wage and the State minimum wage and creates an FLSA adjustment when running a payroll to make sure such employees are paid the minimum legal wage.

In the near future we will be extending the functionality to specific localities to accommodate cases like the city of Chicago where the minimum wage will be higher than both the State and Federal minimum wage. This will allow you to process payroll for tipped employees in such localities without having to do any manual adjustments.